The Mountain View, Calif.-based incubator, a key player in the Silicon Valley startup scene and an early launching pad for companies including Dropbox and Airbnb, will now invest $120,000 for a 7% stake in its participating companies.

Previously Y Combinator’s standard deal was about $17,000 for 7% of the company, plus an $80,000 note from a group of venture investors and firms eventually known as YCVC, which most recently included Andreessen Horowitz, General Catalyst, Maverick Capital and Khosla Ventures.

So, startups will now get $120,000 from Y Combinator, instead of $97,000 from a combination of Y Combinator and select venture firms. That means the implicit valuation for YC startups rises to about $1.7 million from the previous $1.4 million (YC might deviate from the standard deal “in exceptional cases,” presumably for an ultra-hot startup that merited a higher valuation).

“$97k was about right at the time, but the cost of living in the Bay Area has gone up substantially,” said new YC President Sam Altman in a post announcing the new terms. “So we’re increasing the total to $120k, which we hope is enough for the founders to run their business and pay their living expenses for at least 6 months, and sometimes longer.”

The automatic investments from the four firms will also end. Here’s Altman’s explanation:

As YC has become a larger and larger part of the startup ecosystem, we had to deal with things like signaling risk (e.g. a YCVC investor not making a follow-on investment in a company caused some other investors to think the company may not be good) and information issues. All of these issues were issues of perception—the YCVC investors are great firms that always behaved really well, and we’re going to continue to work with them very closely. But we hate complication, and we hate anything that causes issues for our startups, even if it’s just an issue of perception. This should help level the playing field.

The new structure gets rid of convertible notes and other things that Altman said caused “unintended consequences,” which is part of the reason it’s going to a flat $120,000 for 7% structure.

The $120,000 will come directly from YC and a fund it manages that has limited partners, though the accelerator itself has no limited partners, Altman said.

Altman also pointed out that Y Combinator doesn’t charge any fees to startups, and some accelerators do. “…While we don’t think it’s bad behavior, obviously companies should deduct those fees from the investment when they’re thinking about those offers,” Altman said.